Airborne 12.09.16

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Airborne 12.09.16

Says Foreign Partnerships Affect International Competition

Just when anti-trust exemptions appear to be giving US domestic
airlines a way to compete worldwide, a protectionist amendment
threatens to turn it all back.

The Financial Times reports Minnesota Congressman James Oberstar
(above), a Democrat and chairman of the House Committee on
Transportation and Infrastructure, got a very cool reaction last
month to his bill which would impose tougher standards on airlines
seeking antitrust immunity.

US law prohibits domestic airlines from merging with or being
more than 24 percent owned by foreign interests. It also prohibits
competitors from working together, to avoid the effects of
monopolies. So some US carriers have received waivers from
antitrust laws to cooperate with other airlines without actually
merging.

Delta has such an arrangement with Air France-KLM. United is
partnered with Lufthansa, which also owns a small stake in JetBlue.
There are similar alliances in the air cargo sector. In addition to
helping US airlines compete on a global stage, the alliances have
softened criticism from other nations of US protectionist laws.

But in arguing for his stand-alone bill last month,
Representative Oberstar claimed the alliances are eroding airline
competition on international routes. He wants all current alliances
"sunsetted" after three years for review by the US Department of
Transportation, a study by the Government Accountability Office to
assess the effects on consumers of the antitrust waivers, and new
DOT rules developed in response to the findings of the GAO.

Oberstar's February bill got little traction, but the attempt to
attach it to FAA reauthorization is expected to draw a serious
response from the airlines. Stay tuned.